The 20 lakh crore package looks ahead, missing immediate concerns of farmers

  • While the Indian government’s economic package for lockdown relief addresses medium and long term concerns of farmers to an extent, it does not provide immediate relief to them.
  • Millions of farmers and agricultural labour are currently under stress due to the ongoing lockdown which has led to a loss in income, loss of jobs for migrant labour and a disruption in the supply chain.
  • The economic announcements have also raised concerns like corporates controlling the agricultural sector in future.

Following the stress on the agricultural sector by the COVID-19 related lockdown, the central government has announced medium to long term relief measures as part of an economic package. However, the package has fallen short on immediate relief to cultivators and agricultural labourers.

The agriculture sector and allied activities involve about 55 percent of India’s billion-plus population.

In early May, the Prime Minister announced an economic package for India, after which the finance minister announced details which addressed crop loan requirements of rural banks, minimum support price for crops, funding agricultural infrastructure, income support for farmers as well as long term changes to agricultural laws.  

However, farmer groups, non-governmental organisations and experts, say the package does not look into urgent relief and doesn’t address the immediate concerns of those employed in the agricultural sector. 

Shweta Saini, an expert on agricultural issues with the Indian Council for Research on International Economic Relations (ICRIER), a Delhi-based think tank, explained that the measures taken by the government and the package announced are going to have an impact in medium and long-term in coming years but fail to address immediate concerns of the farmers.  

“Initially, when the lockdown was announced, the government allowed movement of harvested crops to ease woes of the farmers, and most farmers continued their agricultural activities despite all lockdown related problems. But farmers were let down by markets as they failed to get a proper price for their produce. Thereafter, the government highlighted that it is offering farmers the Minimum Support Prices (MSP) and is front-loading installment under PM-KISAN (Pradhan Mantri Kisan Samman Nidhi), a central scheme. The point is that these two things were to be given to farmers anyways whether there was a lockdown or not,” Saini told Mongabay-India.

The announcement, multiple experts claim, was a repackaging of announcements made in the budget and raised further questions around the possibility of corporates taking over agriculture and uncertainty of rural family incomes as migrant labourers return to their villages. Additionally, some feel that the amendments to agricultural laws that were announced, while a step in the right direction, will have an impact only in the longer term. 

Agricultural expert Ramandeep Singh Mann said the government’s stimulus package skirts around the current agricultural crisis. “The package is talking about doing away with APMCs and essential commodities act. But these are actions that will yield results in the future, and going by past experiences, there is no guarantee! What about today? The basic issues of farmers like the loss suffered due to lockdown, not getting the right price for their produce and lack of good loan facilities continue to be ignored.” 

“Farmers’ lives are interlocked with local traders and even after this package, it will be so. The reforms announced are part of ongoing programmes of the government. But those plans are too slow in their implementation and will take years before anything concrete happens. The need of the hour was to increase the number of mandis (agriculture markets), so that small and marginal farmers have more access to mandis,” Mann told Mongabay-India.

Measures announced

On May 12, India’s Prime Minister Narendra Modi announced a special economic package, which, when considered along with earlier announcements by the central government during COVID-19 crisis and decisions taken by the Reserve Bank of India, amounted to Rs. 20 lakh crore (Rs 20 trillion). The prime minister stressed that the package that is almost equivalent to 10 percent of India’s Gross Domestic Product will provide a much-needed boost towards achieving Atmanirbhar Bharat (self-dependent India).

Subsequently, India’s Finance Minister Nirmala Sitharaman provided the details of the package on May 14. In it, she announced that India’s National Bank for Agriculture and Rural Development (NABARD) will extend “additional re-finance support of Rs. 300 billion (Rs. 30,000 crore) for meeting crop loan requirement of Rural Cooperative Banks and RRBs (Rural Regional Banks)” over and above Rs. 900 billion (Rs. 90,000 crore) that will be provided by NABARD to this sector in the normal course. This, the government claimed will benefit around 30 million (three crore) farmers, mostly small and marginal, and it will meet their “post-harvest Rabi and current Kharif requirements.”

Over half of India’s population is involved in agriculture and allied activities. Photo by Bhaveshkumar855/Wikimedia Commons.

She also announced a special drive to provide concessional credit to farmers through Kisan Credit Cards, an existing scheme that meets credit requirements of the sector, saying that this will inject additional liquidity of Rs. two trillion (Rs two lakh crore) in the farm sector covering 25 million (2.5 crore) farmers. 

On May 15, in another conference, she underlined that during the lockdown period, funding via existing schemes has been facilitated –  “Minimum Support Price (MSP) purchases of amount more than Rs. 743 billion (Rs. 74,300 crore), PM KISAN fund transfer of Rs. 187 billion (Rs. 18,700 crore) and PM Fasal Bima Yojana claim payment of Rs. 64 billion (Rs. 6,400 crore) has been made,” she said in the announcement. Sitharaman also announced a financing facility of Rs. one trillion (Rs 100,000 crore) for funding agriculture infrastructure projects at “farm-gate and aggregation points (primary agricultural cooperative societies, farmers producer organisations, agriculture entrepreneurs, start-ups, etc.). 

Under the existing PM KISAN Yojana (Pradhan Mantri Kisan Samman Nidhi scheme), a central government scheme to augment the income of small and marginal farmers, income support of Rs. 6,000 is provided to eligible farmer families across the country every year.

One of the biggest announcements made by the finance minister on that day was regarding the change in agriculture-related laws which have been touted by several experts as long-pending reforms. She announced the government’s intention to amend the country’s Essential Commodities Act to ensure better price realisation for farmers and a new central law to provide choices to the farmer to sell their produce at a remunerative price, barrier-free inter-state trade and a framework for e-trading of agriculture produce. Sitharaman also announced that the government will finalise a legal framework to enable farmers to engage with processors, aggregators, large retailers, exporters etc (contract farming). 

Farmer groups dismiss the government’s package as hollow words

While announcing measures for the farmers, Sitharaman had remarked that PM Narendra Modi is “always concerned about the difficulties faced by the poor, including migrant workers and farmers.” She had stated that farmers and workers are the backbone of this nation. “They serve all of us with their sweat and toil. Migrant workers need affordable and convenient rental housing in urban areas in addition to social security. There is also a need to create employment opportunities for the poor, including migrant and unorganised workers. Farmers need timely and adequate credit support.”

These words though didn’t resonate with farmer groups and those directly working on agricultural issues. Regarding the package, Vijay Jawandhia, who is the founder member of the Maharashtra Shetkari Sangathan, a farmer’s organisation in the western Indian state, said, “Khoda pahad nikali chuhiya (a Hindi phrase translated as ‘dug out a mountain only to find a small mouse’ meant to indicate that the announcement was big but had little impact)”

“The lockdown has shown that in the last 25 years India has become ‘super India’ while Bharat has become poorer,  he said, commenting on the economic disparity in India, which was starkly visible during the lockdown. “The migrants walking back to their villages covering hundreds of kilometres is proof of Bharat becoming a servant of India. The package simply offers nothing for the farmers. Most of the major announcements in the stimulus are repackaging of announcements already made by the government in its annual budget etc.,” Jawandhia told Mongabay-India. 

Farmer groups feel the government’s package is not providing any immediate relief to the rural economy. Photo by Mayank Aggarwal/Mongabay.

“The farmers are not even getting the minimum support price for their crops. One of the fears is that in years ahead, the government may do away with the system of MSP. In northern India, at many places, the farmers didn’t get the MSP for wheat, gram and mustard while in Maharashtra there is no one to buy toor dal (a variety of pulse) at the MSP.” 

Yudhvir Singh, who is national secretary of farmer groups the Bharatiya Kisan Union and the Indian Coordination Committee of Farmers’ Movements (ICCFM), said the package has nothing to compensate the farmers for their loss during the lockdown. “The vegetable and fruit growers are devastated as the whole supply chain got broken during the lockdown. Farmers at many places across India were forced to sell wheat at a price that is lower than MSP by Rs. 1,000-1,200 (per quintal).” 

In its package, the government also announced a support of Rs. five billion (Rs. 500 crore) by extending the Operations Greens scheme run by the Union Ministry of Food Processing Industries (MOFPI) to support “all fruit and vegetables”, an extension of the support to tomatoes, onions and potatoes only which the scheme provided so far. According to the package details, the scheme would provide 50 percent subsidy on transportation from surplus to deficient markets and 50 percent subsidy on storage, including cold storages. The government said this will lead to better price realisation to farmers, reduced wastages and affordability of products for consumers.

Agriculture expert Ramandeep Singh Mann, highlighted additional concerns saying that, “No one (policymakers) is talking about losses suffered by vegetable and fruit growers or those involved in horticulture. It has been a nightmarish season for them. The package has failed to do anything for them. In fact, there is a fear that in the next few years, the government will do away with announcing MSP.” 

Read more: COVID-19 lockdown locks down farmers’ income


Can change in the agriculture laws help farmers?

Agriculture contributes to 17.5 percent of India’s GDP. As per PRS India, a research firm, India is among the world’s top producers of wheat, rice, pulses, sugarcane and cotton. India is also the highest producer of milk and the second highest producer of fruits and vegetables in the world. In 2013, India accounted for one-fourth of the world’s pulses production, 22 percent and 13 percent of rice and wheat production respectively. 

Despite India’s evident agricultural prowess in the world, farmers’ groups said it has not resulted in the prosperity of Indian farmers. 

With the changes announced by the government in India’s agricultural laws, the government aims to change that.

Experts claim that farmers growing vegetables and fruits have been completely ignored. Photo by Indrajit DasWikimedia Commons.

In her package, Sitharaman had announced amendments to the Essential Commodities Act to enable better price realisation for farmers. She had stated that with this amendment, cereals, edible oils, oilseeds, pulses, onions and potato shall be deregulated and stock limit will be imposed under very exceptional circumstances like national calamities, famine with surge in prices.

The government has also announced changes in the Agricultural Produce Marketing Committee (APMC) architecture stating that a central law will be formulated to provide adequate choices to the farmer to sell their produce at a remunerative price, barrier-free inter-state trade and a framework for e-trading of agriculture produce. In May 2020 itself, states like Uttar Pradesh, Madhya Pradesh, Gujarat and Karnataka have brought ordinances to amend the APMC architecture. 

On these reforms, ICRIER’s Shweta Saini said that the government subsequently announced long-due reforms in APMCs and the ECA, along with encouraging contract farming and they are steps in the right direction.

“However, these are not the short-term measures which the farmers require right now. Once implemented in the right spirit, these measures will show an impact only in the medium to the longer run, but not immediately. Even the moratorium announced on the loans for farmers will help only 30-31 percent farmers who have taken any institutional loan. Most farmers remain uncompensated as of date. These farmers are no less COVID warriors who ensured a continuous supply of essential commodities even when everything else was shut. The relief package should find ways to compensate farmers for losses incurred today. Besides, should the government also not find ways to reward them?” Saini asked.

Yudhvir Singh said, “the package is tilted towards helping the companies involved in agri-business and not farmers” and “hasn’t translated into more money in the hands of farmers.”

Will government’s reforms lead to corporate control of agriculture sector?

The government in its package had also announced that it will finalise a “facilitative legal framework to enable farmers to engage with processors, aggregators, large retailers, exporters etc. in a fair and transparent manner.”

The farmer groups, however, are concerned that this is a way towards corporate farming and would help the big corporates, not farmers. 

All India Kisan Sabha’s (AIKS) General Secretary Hannan Mollah too criticised the central government and said that it wants to only help the corporates in controlling the agriculture sector. “If the government goes ahead and brings in the reforms it has highlighted then most of the farmers will become irrelevant and everything will be controlled by big corporations. This is when despite all the neglect and apathy, the farmers are ensuring food security even during the lockdown. They are being continuously betrayed by the government of India,” Mollah told Mongabay-India.

“The government had announced intentions of doubling the income of the farmers but if anything has increased in the past few years it is the suicide rate of the farmers.,” he said while adding that several suicides of farmers have already been reported from across the country because of the losses incurred due to COVID lockdown.

Migrants returning to rural India could further stress the farming sector

During the nationwide lockdown imposed to control the spread of the coronavirus pandemic, now in its fourth phase since it started in March, millions of migrants returned to their villages. Experts feel this could further stress the rural economy, mainly agriculture as there would be no money coming in from the city jobs they were forced to leave behind. 

Yudhvir Singh explained that a lot of migrants, who worked in cities and have now returned to their villages, used to send money to their families during this season. The money was used for agriculture, like the sowing of Kharif crops in this season. “With the migrants returning, it means that those families are not going to get that money input this year which translates into a further cash crunch for them. Where is the package addressing these concerns? The package is nothing but zero for the farmers,” Singh said. 

Umesh Mahalle, a farmer based in Dudhgaon in Yavatmal district of Maharashtra, said that in his region, “a lot of people go to Gujarat during these months and earn Rs. 200,000-300,000 by running juice carts.” 

“But this time they have not been able to earn even Rs 50,000 in these months. How will they support their families in villages now? No one has thought about hundreds of thousands of such people,” Mahalle told Mongabay-India.

Several groups of farmers and labourers held a protest against the government on May 27, 2020. Photo from All India Kisan Sabha.

Vijay Jawandhia warned that losses incurred by farmers could lead to more farmer suicides across the country. “The efficiency of a government is directly proportional to the bearing capacity of the common man and that is what is happening in our country,” he said.

Read more: No escape from environmental distress as migrants return home in pandemic lockdown

AIKS’s Hannan Mollah said while input costs have increased for farmers with a higher cost of seeds and pesticides, farmers are not getting any support from the government. “The total approach of the government is anti-farmers and all the announcements made so far to support them is repackaging of old stuff.” 

On May 27, the AIKS organised protests by peasants and agricultural workers in several parts of the country against the central government’s “insensitive” behaviour towards them. They demanded a comprehensive loan waiver to all farmers, assured remunerative price for crops with guaranteed procurement, waiver of electricity bills, an increase of PM-KISAN amount to at least Rs. 18,000 and to bring landless as well as tenant farmers under its purview.


Banner image: Women are an integral part of India’s agricultural workforce. Photo by Mayank Aggarwal/Mongabay.

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